Public Lecture of Prof. Balcerowicz “Crises and economic growth” Was Held Under The Auspieces Of The Sofia Business School
October 21st, 2015, Wednesday
On 21 October 2015, the Reform Union Club and the New Bulgarian University (NBU) hosted a public lecture by the creator of the shock therapy of the early 1990s, the former Prime Minister and manager of the National Bank of Poland, Prof. Leszek Balcerowicz. The event was held under the auspices of the Sofia Business School and brought more than 100 participants from the country’s financial, administrative and business elite to the Sofia Hall of Grand Hotel Sofia. The topic of the discussion was “Crises and economic growth” and aimed at presenting the genesis, development and culmination of economic collapse, as well as the various mechanisms for overcoming them. The context of the discussion was the poor economic growth in the EU, the shocks in the Eurozone and the consequences of the Greek crisis. According to the world-renowned economist, the main reason for the economic and fiscal crisis of the past decade was the wrong policy of the central banks across the world. “A system which depends more on politics than on real economy is more susceptible to failure. We can see this in all the major economic crises. They happen usually under dictatorship regimes and quasi-socialist governments. The reason for this is that in the long term public investment does not yield the positive effect which private investment provides”, Prof. Balcerowicz pointed out. According to him, a stable, albeit modest growth, would contribute much more to a country’s development and he added that the most severe economic collapses come after a rapid growth which has been stimulated by the government. He commented that EU funding does not work miracles and can even be dangerous if the funds fall to the hands of politicians who “play at Father Christmas”. The easiest way to return to a stable growth following a crisis is to reduce the debt to GDP ratio, which can be accomplished through cutting public spending. In addition, efforts should be directed to other sectors, not to those which have led to the crisis. Prof. Balcerowicz pointed out that there is no common solution to the problems in the individual countries in the EU. The common policy cannot replace the national governments and certain policies cannot be forced upon a country just because they work elsewhere in the world. The eminent guest also advised Bulgaria to keep the flat tax and maintain fiscal discipline keeping an eye on the national debt. He reinforced the IMF’s recommendations according to which measures should be taken to curb corruption, improve the business climate and reform the judicial system.
You can see the whole lecture here.